Banking shares - for the most part - continued to gain ground yesterday, after hefty write-offs by UBS prompted talk that the worst of the credit crunch could be over.

An exception was HBOS, which closed 11.5p lower at 593p, having fallen as low as 578p.

Traders pointed to a presentation by HBOS finance director Mike Ellis at a Morgan Stanley conference yesterday morning as one reason for the fall. "Margins are more difficult to predict in such uncertain market conditions, particularly given the extent of Libor/base rate risk," Ellis said. "Margin pressures in 2008 should give way to more stable margins - possibly improving margins - in years to come."

But it was his comments on further writedowns that caused most disquiet: "There will be further negative fair-value adjustments taken through the income statement and available-for-sale reserves in respect of the first quarter of 2008 - given the further and significant deterioration in financial markets since the year end. But these are also expected to reverse over time."

A spokesman said the company was just being realistic, and made no apology for that in the current climate. He added that HBOS shares had recovered by 35% since March 19 when they slumped on the back of unfounded rumours about its finances.

Overall the FTSE 100 rose 63.3 points to 5915.9, helped by an opening rise on Wall Street despite remarks by Federal Reserve chairman Ben Bernanke hinting the US could be heading for recession.

The banking sector accounted for 17 points of the increase, with Royal Bank of Scotland rising 20.5p to 381.5p and Barclays ending 24p better at 504p. Bradford & Bingley, also presenting at the Morgan Stanley conference, rose 6.25p to 204.5p.

HSBC added 4.5p to 865.5p as Collins Stewart issued a buy note despite news that the bank's First Direct business is closed to new mortgage customers. The broker said: "We estimate this will have no material effect on HSBC and believe First Direct is less than 5% of group earnings in total."

But not everyone is so positive. Analyst James Hamilton at Numis said he did not believe the credit crunch was over and advised clients to sell into any rally in banking shares. He pointed out that the high levels of debt being held by consumers was the problem now facing British banks.

And there was another example yesterday of the wider impact of the liquidity crisis. Russian oil company Imperial Energy slumped 29% to 900p after it said it had been unable to raise debt "due to the current state of the credit markets". Instead it plans to issue up to $600m (£302m) of new equity, partly to refinance a $200m loan facility that matures in November.

Severn Trent fell 54p to £14.14 after a trading update disappointed, while housebuilder Persimmon lost 15.5p to 778p after Credit Suisse cut its price target from 630p to 615p with an underperform rating.

Credit Suisse also helped send shares in Wellstream 111p lower to £12.89 despite the maker of pipelines and systems reporting a 64% rise in full-year profits. The bank - which acts as broker to the company - said: "We continue to see upside to our assumptions, but after a 14% rally in the share price in the last week (to a new high), we believe much of this upside is now priced in. We downgrade to neutral from outperform and look for a better entry point."

But pharmaceutical group Shire added 29p to £10.07 on renewed talk of a possible bid from Pfizer or AstraZeneca, while African gold producer Randgold Resources rose 219p to £24.55 after positive news on its reserves.

Vodafone was 4.1p better at 158.4p. Analysts at Bear Stearns raised their recommendation from peer perform to outperform with a 207p target. Tate & Lyle ended 2p higher at 543.5p after a trading statement from the sugar and sweeteners group, which issued three profit warnings last year, contained no surprises, nasty or otherwise.

Lower down the market Raymarine, which makes marine navigation equipment, surged 47.75p to 293.75p as it revealed it had received a bid approach. But Adam Steiner, head of research at SVG Investment Managers, which holds 0.39% of the company, was not impressed.

"Raymarine is a highly coveted asset in a long-term growth market and should appeal to private equity and trade buyers alike," he said. "Given this bid is opportunistic, we would be surprised if shareholders would accept an offer below the price at which the company was trading a year ago [475p]."

Aim-listed intellectual property group Galleon Holdings added after an upbeat annual meeting statement. It has just signed a deal with RDF Media - maker of Wife Swap and Location, Location, Location - to co-produce a number of shows with broadcasters in China.